This week's Real Estate stories

Because the housing glass was sloshing over the rim for the last four years, it's easy to look at the vessel as it drains today and call it half empty -- the implication being that it is going to be all gone in pretty short order. But that thinking ignores all the reasons that housing is still a good investment today and why regular people, not the speculators, will continue to buy in the months and years ahead.

America is still a land of homeowners, and it is unlikely that we'll ever return to the days when the majority of citizens were renters and only the wealthy owned any property at all. We've spent 70 years putting in place public and tax policies that promote homeownership, and the chance that we'll reverse that stand is virtually nil.

Given the nation's demographics, that makes for a lot of potential homeowners, both homegrown Americans and immigrants. And baby boomers, who already are homeowners in tremendous numbers, have shown an appetite to take on additional property in the form of vacation and second homes, not less. Demand, over the long haul, is going to be strong.

Lots of people have made a lot of money in real estate. But the average homeowner makes just enough. After figuring in all the costs of buying and selling houses, the maintenance and the upkeep and the taxes, the return on a house isn't always that grand. But over the years, the average house in the United States has appreciated at a rate about 1.5 percentage points above inflation. Coupled with the enforced savings that paying down a mortgage brings, that has provided a solid nest egg for millions.

There are some troubling signs in the current housing market. The biggest is the continuing buildup in inventory or homes for sale, which as the pace of sales declines becomes an ever-bigger drag on the market. Mortgage rates have been climbing as well -- a situation which always has the potential to put the brake on sales.

Also, no one is yet sure what the complete fallout will be from all of the exotic mortgages that have been originated in the last four years, particularly in high-costs locales, so that folks could even sneak into houses of their own.

But all of that has to be kept in perspective. The inventory numbers look high in absolute terms, but of course we keep adding to the number of homes in this country every year, so as a percentage of the overall stock the for-sale houses aren't relatively that big a deal. Mortgage rates are up, yes, but are still well below where they started the decade and still well below the level -- let's say 9% for argument's sake -- that would really hammer housing down. All you can say about the exotic-mortgage issue is so far, so good. But the real test there won't come before next year, and probably not until 2008.

The most important thing to remember about housing, though, is that all of these numbers play out much better over time. The reason we invented the 30-year mortgage in the middle of the Great Depression wasn't just to make a residential loan affordable; it was as much a statement about how we viewed our housing investment. And it's not fleeting.

Steve Kerch, real estate editor

Benefits of buying a home in a cooling market

Residential real estate, a shining star of the national economy that seemed unflappable over the past couple of years, has hit a speed bump. Nationally, home-price appreciation is slowing down from the rapid pace experienced by many markets over the past few years. Mortgage interest rates are on their way up.

Is this any time to be thinking about investing in a home? Of course it is -- if you're buying it for a place to live, not as a speculative investment, and can afford to take the leap. See Real Estate.

New headache: inflated home appraisals

As the housing market cools, Americans are confronting a problem that was easy to ignore during the boom: inflated appraisals of home values. See story from RealEstateJournal.

Undeveloped plots draw buyers as market softens

The real-estate market has a new cry: Land ho! As the nation's housing market cools, there's a rush to snap up undeveloped property as buyers stake their claim on everything from New England creekfront parcels and mountainous woodlands in Tennessee to big-sky vistas in Montana. See story from RealEstateJournal.

Rating your mortgage lender

How do you annoy and irritate a homeowner? Sell their mortgage to a third (or fourth) party or outsource your customer service. That's according to a new survey by J.D. Power and Associates, which asked 13,000 homeowners what they like and don't like about their lenders' service. See Marshall Loeb's Daily Money Tip.

Why low-cost beach towns will continue to lure buyers

In the past few years, we have seen huge gains in the prices of vacation homes in Galveston, Texas. How much will the housing boom's demise affect secondary or vacation homes? See House Talk.

Mortgage applications fall 1.3%

The number of applications for mortgages to buy homes dropped 2.4% last week, matching the three-year low reached four weeks ago, the Mortgage Bankers Association said Wednesday. Applications for home-purchase loans are down about 20% in the past year. See Economic Report.

Housing markets on the way up and those on the way down

Dividing the proceeds of an inherited house

When my father passed away on Jan. 29, he left his home to my three brothers and me. I would like to keep the house as my own. But because of its value, I cannot afford a regular mortgage at this time. I would like to pay them approximately $40,000 each now and then make monthly payments of $500 for the next three years. This time period will allow me to decide what I want to do with his home and whether or not I can afford a regular mortgage payment. My brothers have homes of their own and are trying to help me keep our father's house. My question is, right now if we sell the house, there is no estate tax because the value falls below the New York guidelines. However, if I take a mortgage or decide to sell in three years, will my brothers have to pay taxes on the monies I give them from either my mortgage or from the sale of the house? See Realty Q&A.

More homeowners choose electronic gates for houses

The white picket fence has a new add-on. Just as gated communities have become commonplace in the past 20 years, electronic gates for private houses are gaining popularity, fueled by homeowners' continuing safety concerns as well as the desire for more privacy. See story from RealEstateJournal.

Builders cut forecasts for 2006 as housing boom fades

More home builders have cut their 2006 profit outlooks as second-quarter orders for new homes have come down significantly from last year on continued weakness in the U.S. housing market. See full story.

Bump in the road on home rental

Bill Klein, 49, restores and sells classic cars in Ogden, Utah. He's been investing in real estate for five years to augment his income. See story from RealEstateJournal.

Mortgage rates drop

U.S. mortgage rates dropped in the week ending Thursday as bond markets started betting the Federal Reserve is near the end of its rate-hike cycle and the housing market continued to slow on several fronts. See Mortgages.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.